Fix and Flip Guidelines for New Property Investors
After strong economic expansion last year, more people are looking to purchase homes in 2019. For commercial real estate investors, this means plenty of opportunities to take advantage of fix and flip projects to generate revenue.
Fix and Flip Projects for New CRE Investors
Fix and flip projects are the perfect entry point for people who are just getting into commercial real estate. Find a property that’s listed below market value, perform improvements and renovations, and then sell the house for a profit. The process is simple, repeatable, and many people who started out with no background in commercial real estate have built small empires from flipping houses.
Research the Neighborhood
In order to figure out your budget on a fix and flip project, it helps to do some research. What are similar properties selling for in the area? How accessible is the property to school, commuting routes, and shopping? Are there plans for any major construction projects in the neighborhood? Even something as simple as the proximity of a property to a major road or railroad tracks can severely impact the potential selling price.
Do Not Skimp on Renovations
Would you buy a classic car from someone at full price if the seller fixed it up with only bondo and primer? The same goes for fix and flip projects. A lot of commercial real estate investors are tempted to go low on materials and make only the basic renovations, thinking they will leave themselves a better profit margin at the end. Home buyers are more educated, thanks to the many television shows dedicated to remodeling houses. You don’t have to install Italian marble floors and smart appliances, but picking out nice materials, and somewhat forward-thinking designs in wiring, heating, and plumbing can actually increase the overall value of the property, while simultaneously attracting buyers.
Financing Fix and Flip Projects
Financing a fix and flip project can be challenging for new commercial real estate investors. Traditional lending channels still consider flipping houses to be risky, and the time it takes for traditional loans to process can delay projects by weeks and months. The best bet is to use a lender who specializes in commercial real estate financing solutions, such as fix and flip loans or fix and flip lines of credit. Both can be arranged quickly to cover the initial purchase and renovation, and keep the project on track.
Approved Business Lending provides solutions for fix and flip projects of all shapes and sizes. Contact our offices today to learn more.